NSAC's Blog

Farm Bills from Last Year Save Less Money Now

March 1, 2013

The Congressional Budget Office (CBO), the official scorekeeper for the funding implications of all legislation, today released a new projection of what the Senate-passed and House Agriculture Committee-passed farm bills from 2012 would cost if they were to be enacted, without changes, in 2013. According to CBO, the Senate farm bill from last year, if re-enacted this year, would save a total of $13.1 billion, while the House Agriculture Committee bill from last year, if re-enacted, would save a total of $26.6 billion. The CBO estimates for last year were $23.1 billion and $35.1 billion, respectively.

The $10 billion decline in total savings in the Senate bill is due to higher expected commodity prices that increase the cost of the proposed shallow loss program, lower projected milk prices that increase the cost the proposed new dairy margin protection program, higher projected disaster aid costs, lower projected enrollments in the Conservation Reserve Program that reduce savings from the bills’ new lower CRP cap, and a brand new assumption CBO is making with respect to the food stamp program that would nullify $4 billion in savings projected last year.

The $8.5 billion decline in total savings in the House bill shares the same milk, disaster, CRP, and food stamp issues as the Senate bill. The House proposed new commodity program increasing in cost by only $1 billion according to CBO, but the cost of the crop insurance title in the House bill would increase $1.4 billion as a result of the interplay between the House commodity proposal and the proposed new Supplemental Coverage Option in the crop insurance title.

In summary, the Senate bill from last year would now reduce spending for production subsidies by $10 billion and reduce spending for conservation programs by $5 billion. The entire rest of the Senate farm bill would increase spending by $2.3 billion, for a new net savings of $13.1 billion.

The House Committee bill from last year would now reduce spending for production subsidies by $11.5 billion, reduce spending for conservation programs by $4.5 billion, and reduce spending for food stamps by $11.7 billion. The entire rest of the House farm bill would increase spending by $1.1 billion, for a new net savings of $26.6 billion.

Most of these changes in budget scoring had been expected, though guesses about the magnitude of the changes varied a bit.

The most unexpected change was perhaps the $4 billion reduction in proposed food stamp spending. CBO explained that change as follows: “CBO has obtained new information on state practices and USDA’s interpretation of current law with respect to how households qualify for utility allowances. Accordingly, CBO now believes that states would have more flexibility under the proposal than was assumed for the previous estimate.”

The new CBO estimates do not appear to account for the over $6 billion additional farm bill spending reduction due to sequestration, automatic budget cuts that go into effect starting later today and for the farm bill are spread out over the next nine years.

The new numbers will likely come into play when the House and Senate Budget Committees write their budget resolutions in April, and then again of course when and if the Agriculture Committees return to the task of trying to write a new farm bill later in the year.